ECB’s Lagarde: Seeing limited signs of the risk of stronger price pressures

We continue to view this inflation upswing as largely temporary, said the ECB President Christine Lagarde at the Hearing of the Committee on Economic and Monetary Affairs of the European Parliament.

Additional quotes:

  • Inflation could prove weaker than foreseen if economic activity were to be affected by a renewed tightening of restrictions.
  • Seeing limited signs of this risk of stronger price pressures so far.
  • Our baseline scenario continues to foresee inflation remaining below our target over the medium term.
  • There are some factors that could lead to stronger price pressures than are currently expected.
  • It is evident that the economic recovery in the euro area is increasingly advanced.
  • The growth outlook continues to be uncertain and heavily dependent on the evolution of the pandemic.
  • We remain entirely committed to preserving these favourable financing conditions.
  • This is necessary for a robust recovery that will restore inflation to its pre-pandemic level.

Market reaction:

The remarks undermined the already weaker shared currency. The EUR/USD pair was last seen trading just below the 1.1700 mark, well within the striking distance of monthly lows touched last week.

FX

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